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risks

  • Thu, Jan 10, 2019 - 11:31am

    #4

    davefairtex

    Status Diamond Member (Offline)

    Joined: Sep 03 2008

    Posts: 3131

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    risks

Right now, to my mind, there are a lot of upside risks – news events that could cause a large rise in prices.  The largest of these is the tariff settlement.  I mean, you know we will get a trade settlement, right?  Trump has the stage all set for this to happen.  He got the NAFTA thng done, and now he’s working on China.  So why stand in front of that train?  If you are looking to sell, its after that news hits the wires.  Same goes for the government shutdown.  At some point, that ends.  When it does, it will probably result in a relief rally higher in risk assets.

You really want to take a position prior to any of these events when you know they are on the way?

Wait for the news to hit, and then see how the market handles the news.

We also have a significantly more dovish Fed.  It went from “we’re going to QT forever, and we’re going to raise rates like clockwork every other meeting” to “well of course we can adjust the QT thing if need be, and we will be ‘patient’ with the rate increase path.”

That’s a big change.

Lastly, we don’t really have any poor near-term macroeconomic data for the US.  There’s “carmageddon”, but there’s also the very strong payrolls report.  A 5% (annualized) m/m wage increase is nothing to sneeze at.

The crude oil sell-off appears to be over too.  Whatever caused that dramatic move lower (and I still think it was the market’s concern that the Saudis were no longer going to be the swing producer – which is now corrected) has now eased.  So that pressure is off now too.

That’s what I see.